Update: interim measures from Mainland courts in aid of a Hong Kong arbitration

Since 1 October 2019, parties to a Hong Kong-seated arbitration have held a significant procedural advantage: the ability to apply directly to Mainland courts for interim measures before or during their proceedings. That mechanism – the Arrangement Concerning Mutual Assistance in Court-Ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the Hong Kong Special Administrative Region – remains one of the most consequential cross-border procedural instruments available to international counsel in the region.

Under the Interim-Measures Arrangement, a party to a Hong Kong-seated arbitration administered by a designated institution may apply to a competent Mainland court for property preservation, evidence preservation or conduct preservation. The application may be made before the arbitration is commenced, or after commencement. Hong Kong arbitrations seated at the HKIAC (the Hong Kong International Arbitration Centre, the city's principal international arbitral institution) fall within the institutional perimeter of the Arrangement.

For international groups with assets, counterparties or operations across the boundary, this is not a technical footnote. It is the difference between an arbitral strategy that reaches Mainland assets and one that does not.

What this mechanism does – and what it does not

The Arrangement permits a party to seek Mainland court-ordered preservation before a final award exists. That matters greatly in commercial disputes where asset dissipation is a live risk. Without the Arrangement, a claimant in a Hong Kong arbitration would ordinarily need to wait for an award, then apply for recognition and enforcement in the Mainland – a sequence that can take months and may find diminished assets at the end of it.

The available forms of preservation under the Arrangement are: property preservation (freezing or securing assets), evidence preservation (preserving documentary or physical evidence), and conduct preservation (restraining specific acts). In our cross-border disputes practice, property preservation is the most commonly invoked category, particularly in claims against Mainland counterparties holding real property, bank accounts or receivables on the Mainland.

The Arrangement does not replace or bypass the ordinary arbitral process. The substantive award is still issued by the tribunal in Hong Kong under the Arbitration Ordinance (Cap. 609, Hong Kong's arbitration statute, modelled on the UNCITRAL Model Law). Enforcement of the final award in the Mainland remains governed by the 1999 Arrangement on mutual enforcement of arbitral awards and its 2020 Supplemental Arrangement. The interim-measures mechanism is a parallel, precautionary route – not the endgame, but the step that protects the endgame.

One point frequently misunderstood by foreign principals: the Arrangement applies to Hong Kong-seated arbitrations at designated institutions. The seat is not a formality. An arbitration clause that fails to specify Hong Kong as the seat – or that names an institution outside the designated list – will fall outside the Arrangement's protection. We see this error with some regularity in contracts drafted without cross-border enforcement advice.

Who this affects and the immediate steps

Any international group with counterparty or asset exposure on the Mainland that holds, or expects to hold, an arbitration clause governed by Hong Kong arbitration should review its position against the Arrangement. The mechanism is particularly relevant for groups in manufacturing, real estate, joint ventures and financing arrangements where the obligor's assets are predominantly or substantially located in the Mainland.

The immediate questions are practical. First, does the arbitration agreement specify a qualifying Hong Kong seat and institution? Second, has the claimant mapped the Mainland assets – their nature, location and the competent Mainland court – before a dispute crystallises? Third, is the evidentiary package ready to support a preservation application on short notice? Mainland courts apply their own procedural requirements to these applications; the application must be submitted with supporting documents in a form that meets Mainland court standards, not only the standards of Hong Kong procedure.

If a dispute is already afoot, the sequencing becomes critical. The Arrangement allows applications before the arbitration is commenced, which means a party can move to preserve assets in the Mainland at an early stage – sometimes before the counterparty is aware that formal proceedings are imminent. In our cross-border practice, the coordination between the Hong Kong arbitral file and the Mainland preservation application is one of the more technically demanding sequences we manage; getting the timing and documentation right determines whether the application succeeds.

For groups that have not yet faced a Mainland counterparty dispute, the Arrangement is an argument for proactive structuring. A well-drafted arbitration clause, a documented understanding of the counterparty's Mainland asset base, and an advance read on the competent court can dramatically shorten the response window if a dispute does arise.

To assess how the Interim-Measures Arrangement applies to your arbitration clause or your current cross-border dispute, contact us at info@lockhartyip.com.

Related practices and materials

• Disputes & Arbitration – cross-border enforcement, arbitration strategy and interim relief across Greater China
• New York Convention enforcement route through Hong Kong – guide to award enforcement for non-Mainland respondents
• Shareholder and joint venture disputes: Cayman Islands considerations – structuring and dispute considerations for offshore holding vehicles

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This publication is general information and does not constitute legal advice. For advice on your situation, contact info@lockhartyip.com.